Hired and Non-Owned Auto Liability

The two halves

Hired auto covers liability when the business rents, leases short-term or borrows a vehicle. Non-owned auto covers liability when someone uses a vehicle the business does not own, usually an employee's personal car, for business purposes.

The employee's own auto insurance is generally expected to respond first. HNOA protects the business itself, which is often sued alongside the driver.

Businesses that often need it

• Offices whose staff visit clients
• Restaurants with employees who deliver in their own cars
• Contractors who rent a truck for one job
• Nonprofits with volunteer drivers
• Businesses with no company vehicles at all

What it does not cover

HNOA is liability only. It does not repair the rented or personal vehicle, and it does not replace the employee's own auto policy. Some insurers sell it as an endorsement to a general liability or business owners policy, others as a standalone business auto policy.

Why the business is exposed

When an employee causes a crash while running an errand for work, the injured party can sue the employer as well as the driver, on the theory that the employee was acting within the scope of the job. If the employee's personal auto limits are low or the personal insurer disputes coverage for business use, the business can face the remaining claim. HNOA is designed to protect the business in that situation.

What insurers ask

• How many employees drive for work and how often
• What the trips involve, such as client visits, deliveries or bank runs
• Whether you check driving records for employees who drive
• How often you rent vehicles and for how long
• Whether any owned vehicles exist, since those need their own coverage

Good practices for employee drivers

Ask employees who drive for work to keep personal auto insurance in force and to tell you if it lapses. A written policy on phone use, passengers and personal errands during work trips helps, and some businesses check motor vehicle records for frequent drivers. These steps can also make the account easier to place.

Rental counter decisions

HNOA covers liability, not damage to the rental car itself. When you rent for business, the rental company's damage waiver, a business credit card benefit or hired auto physical damage coverage on your own policy may cover the car. Check which one applies before you decline the waiver.

Frequently asked questions